Lamar Advertising's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Lamar Advertising (LAMR)

Q1 2012 Earnings Call

May 03, 2012 3:00 pm ET


Kevin P. Reilly - Chairman, President, Chairman of Lamar Media Corporation, Chief Executive Officer of Lamar Media Corporation and President of Lamar Media Corporation

Keith A. Istre - Chief Financial Officer, Principal Accounting Officer and Treasurer

Sean E. Reilly - Chief Executive Officer


Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

James Dix - Wedbush Securities Inc., Research Division

Jaime Morris - UBS Investment Bank, Research Division

Nadia Lovell - JP Morgan Chase & Co, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

David W. Miller - Caris & Company, Inc., Research Division

Douglas M. Arthur - Evercore Partners Inc., Research Division

Bishop Cheen - Wells Fargo Securities, LLC, Research Division



Excuse me, everyone, we now have Kevin Reilly, Sean Reilly and Keith Istre in conference. [Operator Instructions] In the course of this discussion, Lamar may make forward-looking statements regarding the company, including statements about its future financial performance, strategic goals and plans.

Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call and the company's reports on Forms 10-K and 10-Q and the registration statements that Lamar files with the SEC from time to time. Lamar refers you to those documents.

Lamar's first quarter 2012 earnings release, which contains the information required by Regulation G, was furnished to the SEC on the Form 8-K this morning and is available on Lamar's website,

I would now like to turn the conference over to Kevin Reilly. Mr. Reilly, you may begin.

Kevin P. Reilly

Kerry, thank you. I want to welcome all of our analysts, shareholders and friends to our Q1 call. We're pleased with our Q1 performance. And as we look at the entire year, even though the month-to-month is a little choppy, and Sean will address that, we feel like our book is shaping up quite well and that all of our shareholders will be pleased with our top line growth. Throughout the rest of this year, we will continue to invest in our digital platform and we expect to achieve the CapEx full year guidance that we've -- gave on our last call. And we will also continue to repay debt. Our leverage at year end will, in all likelihood, be below 4%.

And with that, I'd like to call -- turn the call over to Keith Istre to walk us through the numbers.

Keith A. Istre

Thanks, Kevin. Just to highlight a couple of the metrics for the first quarter results. On the revenue side, as you know, we guided to revenue pro forma growth of up 3% for the quarter and we came in slightly better than that at up 4%. National and local both added to that result. They were both up in the mid-single digits. Again, Sean will address that later on.

We did guide to revenue growth of up 3% for the second quarter, a little bit less than Q1. And just to reiterate our position on guidance, we always give the market the best guidance that we have at the moment that we do this call. We've exceeded our guidance over the past few quarters. And we've been cautious in giving out guidance because since the second quarter of last year, our quarters, on a monthly basis, have been -- have shown peaks and valleys in the growth. In years past, in normal times, if we posted a 7% top line growth, it was pretty much 7% each month during the quarter. And we're just -- we're seeing more volatility since the Q2 of last year, so we are intentionally trying to be cautious not to misguide anyone in a positive or in a negative sort of way.

To touch on the expenses real quick. I had mentioned on the last call that for the first quarter, I thought we'd be up about 5%. And expense growth on a consolidated basis, we came in a little better than that at 3.5%. There were 2 categories that really contributed to that performance: number one, our lease expense on the billboard side was approximately $1 million for the quarter, less than what we had projected. Our guys are still managing their lease portfolios. We started that back at the end of '08 and they continue to groom that. We dismantled 700 structures in the first quarter that didn't meet profitability hurdles and that contributed to the reduction in that lease cost.

Also the bad debt expense category was about $0.5 million less than we were expecting, which I think is just a sign that the economy continues to improve and our customers are in pretty good shape.

For the year, we still stand by our expense growth guidance from the last call of approximately 3%. And in Q2, we think that the expense growth will be somewhere in the 4% range for the quarter, which was what we expected. It's not that it's an increase -- an unexpected increase over the second quarter. When I told you that the expense growth would be approximately 3% for the year, we were expecting roughly 5% for the first quarter, 4% for the second and then low second digits in the back half.

So with that, Sean?

Sean E. Reilly

Thank you, Keith, and I want to thank everybody for accommodating our later-than-usual call time. We all -- we're flying back from the old AAA convention this morning, and it was a great convention. There's some solid industry initiatives going on and it was an exciting place to be, and you could feel the energy in the room.

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